People First, Strategy Second

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"The single most important strategic pillar of any great enterprise is people,” best-selling author Jim Collins said in his Tuesday keynote session at the SHRM 2012 Annual Conference.

After spending nine years studying why some companies thrive in uncertainty or even chaos, while others do not, for his latest book Great by Choice: Uncertainty, Chaos, and Luck—Why Some Thrive Despite Them All (HarperBusiness, 2011), Collins concluded that “it all begins with people.”

The most important executive skills for building a great organization are “the ability to pick the right people, to make disciplined people decisions and to make sure all key seats are filled with the right people,” Collins told attendees.

Collins, whose previous works include Good to Great, How the Mighty Fall and Built to Last, has spent nearly a quarter of a century studying great companies that endure—how they grow, how they attain superior performance, and how good companies can become great companies.

“It’s very dangerous to study success … so we don’t,” he said. “We study the contrast between success and failure … between great and good.

“Greatness is not primarily a function of circumstance … it is a matter of conscious choice and discipline,” he noted.

Level 5 Leaders

Collins described five levels of leadership competence. The first level includes highly capable individuals, followed by contributing team members at level two, competent managers at level three, effective leaders at level four and executives at level five.

According to Collins’ research, the greatest leaders share a common trait: they are level five leaders. “Level five leaders have an ‘X factor’ that is different than level four leaders,” Collins explained: humility.

Though Collins mentioned a few great leaders with “very healthy confidence,” such as Bill Gates and Steve Jobs, he said that the critical difference is that for level four leaders, “it really is about them.” By contrast, level five leaders’ “ego and ambition and confidence and drive are channeled outward into a cause, into a purpose, into an organization or into a quest that is not about them,” he said.

“Success coupled with arrogance inevitably leads to failure,” he added. “It is outrageous arrogance to neglect people and simultaneously expect them to deliver their best.

“No single leader by himself or herself can make a great company,” Collins added. “Level five leaders understand this; they have to build an entire team to make a company great.”

Triad of Behaviors

Level five leaders possess other key behaviors, Collins has found. These include:

Fanatic discipline. Such leaders are “disciplined people who engage in disciplined thought and who then take disciplined action.” But he warned attendees not to confuse discipline with bureaucracy. “The purpose of bureaucracy is to make up for undisciplined people,” he said.

As an example, Collins compared Roald Amundsen’s successful 1910-12 South Pole expedition and Robert F. Scott’s ultimately fatal Antarctic expedition during that same time to describe the kind of discipline level five leaders use to pursue results. “Discipline also means not going too far,” he said.

Empirical creativity. “Creativity is the natural human state … discipline is not,” Collins noted. “The really rare combination is finding out how to marry the two so we amplify creativity rather than destroy it.

Productive paranoia. “The only mistakes you can learn from are the ones you survive,” Collins noted. This means preparing before bad stuff happens, he said. The ultimate hedge against uncertainty, he said, is who you have on the other end of the rope.

Right People for Key Seats

When looking for people to hold key seats, Collins said level five leaders seek those who:

  • Share core values.
  • Don’t need to be tightly managed.
  • Understand they do not have a job; they have responsibilities.
  • Do what they say they will do 100 percent of the time.

In addition, such individuals tend to look outward when good things happen, and give credit to others. However, when bad things happen they look in the mirror and take responsibility.

“It all starts and ends with people,” he noted.

Collins ended the session with a “to do list” for attendees that reiterated some of the points he made throughout the session. Among his suggestions:

  • Banish the word “job” and replace it with “responsibilities.”
  • Start a “stop doing” list. “Work is infinite; time is finite,” he said. “If you have more than three priorities, you have none.”
  • Commit to challenging all young leaders to become level five leaders. “We need legions,” he said. “We need a level five generation.”

Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.  To read the original article, please click here.